Which property assessment approach factors in construction costs for replacement buildings?

The Cost Approach is the correct method for property assessment that considers construction costs for replacement buildings. This approach involves estimating the cost to build a similar structure with the same utility as the subject property, taking into account the current costs of materials and labor, as well as depreciation for the existing property. Assessors utilize this method particularly when there are few comparable sales or when the property is unique, as it provides a framework for determining value based on how much it would cost to replace the building.

The focus on replacement costs enables assessors to accurately reflect the value of a property in situations where market conditions may not provide adequate data for other valuation methods. By incorporating factors such as construction costs and depreciation, the Cost Approach can be essential for new construction or special-use properties where market data might be limited.

The other methods mentioned, while valuable in certain contexts, do not emphasize construction costs in the same way. The Sales Comparison Approach relies on recent sales data from comparable properties, the Income Approach focuses on the earnings potential of the property, and the Highest and Best Use Approach assesses the most profitable use of the property without directly considering construction costs.